If Expenses Are Greater Than Revenue, the Income Summary Account

question 88

Multiple Choice

If expenses are greater than revenue, the Income Summary account will be closed by a debit to

• A) Cash and a credit to Income Summary.
• B) Income Summary and a credit to Cash.
• C) Capital and a credit to Income Summary.
• D) Income Summary and a credit to Capital.
• E) Income Summary and a credit to Drawing.

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Definitions:

Critical Value

A threshold value that defines the boundary or cut-off point beyond which an observed test statistic is considered statistically significant.

Type I Error

The error made when a true null hypothesis is incorrectly rejected.

Type II Error

The error that occurs when a false null hypothesis is not rejected, also known as a "false negative."

Probability

The degree to which something is likely to happen, quantified as a number between 0 (impossible) and 1 (certain).